UNEP - IIR - AREA - CSG - International special issue 2019-20
REGULATORY LOOPHOLES The current regulatory system is inadequate to allow customs officials to control HFC trade at the European border: 1. Quotas and authorisations are not needed for imports of less than 100 tCO2e of HFC per year (in equipment or as bulk gas). This is almost 70kg of HFC-134a. 2. Although customs officials have access to the HFC Registry, where they can check whether or not an importer is registered and access the importer’s annual quota allocation or authorisation, there is currently no access to real time information that can tell customs how much a company has already imported. Even if an importer was clearly importing an amount in excess of the company’s annual quota (e.g. in one shipment), customs are still not able to determine that the shipment is in contravention of the F-gas Regulation since the importer could claim (legitimately or otherwise) that part of the shipment is for re-export outside the EU, and therefore outside of the quota system.This allows a company to legitimately exceed its annual quota as long as it exports any excess by the end of the reporting year. 3. Units declared on the Single Administrative Document (SAD) at customs are in kilogrammes or tonnes, whereas HFC quota is measured in tCO2e. This puts the onus on cus-
toms officials to estimate tCO2e, potentially a complicated task, particularly for equipment imports. 4. There is no obligation to cross check data reported to the HFC Registry with EU customs data. This is of particular concern given the huge influx of new entrants, i.e. new companies joining the Registry. A total of 1,699 companies reported during 2017, 33% more than the previous year. 17 TOOLS TO COMBAT ILLEGAL TRADE • HFC licensing: EU trade in ODS was controlled via a per shipment licensing system. Issued on a per shipment basis, HFC licences could be used to ensure a company stays within its quota. For example if a company wishes to export HFCs it would only receive that credit back on its quota once the export has occurred. HFC licensing would also enable customs to cross check importer declarations with exporter information. The EU is currently looking at automatically linking customs declarations with the data in the HFC Registry through the Single Window environment for Customs, which could allow real-time access to remaining quota. However efforts to mandate CO2e as a mandatory measure on the TARIC code, to en-
EIA & Legambiente taking part in the debate during the 18th European Conference in Milan. 30 / INDUSTRIA&formazione
able comparison between customs and HFC Registry data, have so far failed. Moreover the system is not operational in all EU Member States and will take several years to set up. • Banning Non-Refillable Containers: Although the placing of non-refillable (‘disposable’) containers of HFCs on the market has been banned in the EU since 2006, those placed on the market before 2006 as well as cylinders sold where provisions are made for their return and refilling are exempt. These exemptions make it difficult to enforce the ban. A comprehensive ban on the use of disposable cylinders should replace the current ‘placing on the market’ ban. There are also indications that high refrigerant prices are driving a trade in ‘disposable refillable’ cylinders, whereby refillable cylinders are being illegally placed on the market, without provisions for return and refill.xviii Member States need to give clear guidance on a comprehensive system to ensure cylinders are returned and refilled. CONCLUSION Given the availability of cheap HFCs outside the EU, it is not surprising that much of the illegal trade is reported to be occurring at EU border countries. The current HFC reporting system does not allow customs authorities to determine whether or not HFC shipments are within quota and a number of loopholes in the system allow unscrupulous traders to reap quick profits, exploiting a demand for cheap HFCs with little risk of punitive measures. Enforcement of the F-gas Regulation is clearly hampered by the absence of a system whereby customs officials can determine if an import of bulk HFCs or HFCs in equipment is covered by quota and have the power to prevent a shipment which takes an importer over its quota. This is an essential requirement of a licencing system, which is now required under the Montreal Protocol’s Kigali Amendment, and should be implemented without delay. This is particularly critical in light of the significant rise in the number of